Simple Real Estate Definitions: Right To Cancel

June 28, 2012
Last updated:
March 16, 2022
Post cover image
In This Article

If you are buying a home, there are certain terms in real estate that you should know.

As part of the federal Truth-in-Lending Act, refinancing homeowners are granted a 3-day “cooling off” period post-closing during which they retain the right to rescind, or “cancel”, their recent refinance without penalty or cost.

Right to Cancel

The Right To Cancel is protection against surprises at closing and/or a change of heart. It’s also a safety valve for homeowners signing paperwork under duress. With 3 days to revisit and rethink the terms of a loan, a homeowner can maintain tighter control of his/her financial situation.

View Current Mortgage Rates

If you ever have the wish (or need) to execute your right to rescind, be aware that the process is a formal one. The required steps must be completed on-time, and in order, or else your request will be invalid.

The process starts with a document labeled “Right To Cancel”. It’s included in your closing package and lists the terms of a rescission in straight-forward language.

Important Aspects of the Right to Cancel

Among the key points:

  1. You have 3 business days during which to cancel your loan.
  2. When you cancel the refinance, the entire transaction is cancelled.
  3. You must submit your Right To Cancel in writing.

“Business day” is defined by the government to be every day, save for Sundays and federal holidays. A loan that closes on a Monday, therefore, must be rescinded prior to Friday at 12:00 AM.

Typically, rescission requests are faxed to the settlement agent, notary, or title company assigned with the refinance. It’s good practice to ask for an acknowledgement of receipt as proof of delivery, too.

There are some refinances for which the Right to Cancel does not apply, however. This includes refinances linked to an investment property, and loans not collateralized by residential real estate. There are other conditions, too, that may supersede your right to rescind so be sure to ask your lender.

Get an Instant Mortgage Rate Quote Today

Have Questions About Mortgages?

Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region that includes Idaho, Colorado, and Oregon. We offer a wide variety of mortgage programs and products with flexible qualification criteria since 1992. Please contact us if you have mortgage-related questions.

Other Blogs You May Like
Buying a Home: Do You Know the Lingo?
April 18, 2022
4 min read
Buying a Home: Do You Know the Lingo?
If you’re planning to buy a home sometime soon, you’ll want to get familiar with the vocabulary...
What’s a ‘Qualified Mortgage’ and Why is it so Important?
January 26, 2022
5 min read
What’s a ‘Qualified Mortgage’ and Why is it so Important?
A qualified mortgage might be just what you need to make your dreams of homeownership a reality....
Show 2 more posts
from this category

Connect with a Mortgage Advisor Today!

Whether you’re buying a home or ready to refinance, our professionals can help.

Compare Mortgage Rates in Your Area Instantly

No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.

Subscribe to our newsletter